The City watchdog has fined a Dundee law firm and two individuals for giving clients "unsuitable advice" about investing in structured products backed by the collapsed group Lehman Brothers.

The Financial Services Authority fined Thorntons Law, which has an investment services arm, a total of £35,000, after it found the firm had not given clients suitable advice.

The regulator's review found that Thorntons had recommended investing in the products even when clients could not afford to lose the money; said there was "no risk to capital" and failed to meet appropriate standards of compliance monitoring. Partner Michael Royden, who was responsible for compliance oversight, was hit with a £10,500 censure, while Robert Yarr, of McClelland Yarr Financial Services, was fined £28,000 for failing to warn clients of counterparty risk or keep adequate records.

Margaret Cole, the FSA's managing director of enforcement and financial crime, said: "Where we find evidence that firms are giving unsuitable advice to investors relating to complicated investments such as structured products we will not hesitate to take action."